Table 29-4 Bank of Pleasantville Assets Liabilities Reserves $3,000 Deposits $50,000 Loans 47,000 Refer to Table 29-6 . Assume the Fed's reserve requirement is 5 percent and all banks besides the Bank of Pleasantville are exactly in compliance with the 5 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Pleasantville decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase?
Table 29-4 Bank of Pleasantville Assets Liabilities Reserves $3,000 Deposits $50,000 Loans 47,000 Refer to Table 29-6 . Assume the Fed's reserve requirement is 5 percent and all banks besides the Bank of Pleasantville are exactly in compliance with the 5 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Pleasantville decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase?
Chapter13: Monetary Policy
Section: Chapter Questions
Problem 8E
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Table 29-4
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Refer to Table 29-6 . Assume the Fed's reserve requirement is 5 percent and all banks besides the Bank of Pleasantville are exactly in compliance with the 5 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Pleasantville decides to make new loans so as to end up with no
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